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7/23/2018

HOPES, FEARS FOR NIGERIA AIR SHOW

The unveiling last week of a new national carrier Nigeria
Air both rekindled hope and created fears in Nigeria. Speaking on Wednesday, July
18, 2018 before some select Nigerian legislators, heads of aviation agencies,
airlines, aviation equipment manufacturers and the investing community at the
Famborough International Airshow in London, Minister of State for Aviation,
Senator Hadi Sirika, announced 'Nigeria Air' as the name of the new national
flag carrier. The colour scheme of green and white, symbolic of Nigeria's
colours, was also adopted for the airline.

The minister said the unveiling of the airline at the
Famborough Airshow took due note of the fact that being the largest
congregation of global aviation industry players, it afforded the best
opportunity to market the airline to prospective investors and register it in
the minds of all stakeholders ahead of its formal launch billed to take place
soon in Abuja. Sirika announced that Nigeria Air will make its inaugural flight
on December 19, 2018. Commencing with 5 aircraft, the airline is expected to
grow in capacity to 30 aircraft within five years.

According to Sirika, Nigeria Air will be private-sector
driven with the federal government acquiring only five percent equity in order
not to repeat past mistakes. He said, "This airline, because it is a
Private Public Partnership (PPP), the investors who put in their money and
strategic partners would decide who runs the airline. This airline is a
business and not a social service. It is not intended to kill any airline in
Nigeria but complement and promote them."

It would be recalled that the defunct national carrier,
Nigeria Airways, was liquidated under former President Olusegun Obasanjo in
2003 owing to huge liabilities occasioned largely by corrupt practices.
Nigerian Airways, founded in 1958, was wholly owned and managed by the federal
government. Mismanagement, abuse of privileges by government officials and
failure to uphold contractual agreements were some of the problems that led to
its collapse. British billionaire Richard Branson, set up Virgin Nigeria in
2000 had to pull out in 2010 over what he described as interference by
politicians and regulators. The airline was rebranded Air Nigeria but it closed
down in 2012 with N35 billion debts.

Minister Sirika lamented the many years of not having a
national carrier in Nigeria despite its large flying population. He said the
unveiling of Nigeria Air was an important day for Africa's largest economy and
largest population. Sirika said the new airline will take advantage of 81
routes including domestic, regional and international.

The benefits of having a national carrier are numerous.
Apart from creating jobs, a national carrier opens several windows for aviation
training, establishment of maintenance facilities, ground handling and aircraft
leasing. The money that today accrues to foreign carriers from the proceeds of
Nigerian travelers to international destinations will eventually boost the
country's economy when Nigeria Air becomes operational.

However, fears are already building up on the nature of the
intended PPP which should not only drive the business but also define
operational guidelines for the airline. For instance, if Nigeria Air is planned
to be private sector driven, how come government has decided the choice of
aircraft, lease/purchase of aircraft and acquisition partnership without a
board or management for the airline? This is at a time when investors are still
being wooed to invest in the airline. Besides, partnering with other national
carriers that are supposedly competitors in a similar business is not likely to
be very helpful in building a competitive national carrier that Nigeria Air is
projected to be.

As government proceeds with other arrangements, it should be
guided by transparency in all stages. We also advise that efforts should be
made to resolve all opaque or outstanding issues including the establishment of
a maintenance facility and a leasing company before the airline is finally
launched. Otherwise, Nigeria Air would be another national carrier planned to
fail.

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